Republicans Stretch Truth in Debate Salvos

By Bloomberg News -
Oct 12, 2011

Oct. 12 (Bloomberg News) -- Mitt Romney, Rick Perry and the
other Republican presidential candidates stretched the truth on
health care, job creation and the deficit in a debate last night
as they attacked each other and President Barack Obama.

Romney, a former Massachusetts governor, said Obama’s
health-care law would increase spending by $1 trillion, while
Texas Governor Perry said he would make America energy
independent. Former Godfather’s Pizza chief executive Herman Cain argued that his “9-9-9” tax plan is revenue neutral.

Those are among the statements by the White House
contenders that strayed from the truth as the candidates sought
to distinguish themselves on jobs and the economy, the focus of
the debate at Dartmouth College in Hanover, New Hampshire,
sponsored by Bloomberg News and The Washington Post.

Following are examples of assertions that didn’t stand up
to fact-checking by Bloomberg and Post reporters and analysts.

Romney on Economy

The Claim: Romney said “median income in America has
declined by 10 percent during the Obama years.”

The Background: Republican presidential candidates have
tried to outdo each other with their criticism of Obama for his
handling of the economy.

The Facts: Figures from the U.S. Census Bureau show that
median household income fell by 2.9 percent from the end of 2008
to the end to 2010 after taking inflation into account. A report
released this week by two former census officials who made their
own estimates put the drop at 9.8 percent from December 2007 to
June 2011. That covers a period before Obama took office in
January 2009 and also takes inflation into account, something
Romney didn’t mention.

Romney on Health

The Claim: Romney said Obama’s health-care law raised
spending by $1 trillion.

The Background: The 2010 legislation that Obama signed
included a mix of spending increases and cuts.

The Facts: The law increases spending by $788 billion over
10 years, while achieving $931 billion in savings over the same
time for a net deficit reduction of $143 billion, the
Congressional Budget Office estimated in March 2010.

Perry on Jobs

The Claim: Perry said taxpayer-funded programs to lure
employers have created 54,600 jobs in Texas. He said 75 percent
of the dollars went to recipients that didn’t contribute to his
campaign.

The Background: As governor, Perry oversees the Texas
Enterprise Fund and Texas Emerging Technology Fund. The programs
provided about $633 million to companies such as Washington
Mutual, now a JPMorgan Chase & Co. (JPM) unit, and Countrywide
Financial, now owned by Bank of America Corp. Perry’s campaigns
received contributions from political action committees and
individuals tied to both companies.

The Facts: Assessing job creation has been difficult
because the funds haven’t had to report the number of new
positions produced, according to Texans for Public Justice, a
nonprofit political watchdog group in Austin. Only 11 of 50
recipients of Enterprise Fund money had met goals promised by
2009, the group said in a September 2010 report.

By the end of 2009, companies receiving enterprise fund
money listed 22,544 jobs created in Texas, according to the
report. An additional 8,147 were tied to three projects that
also got cash from the program.

Cain on Deficit

The Claim: Cain pledged to present a balanced budget a year
after taking office. He said the only way to bring down the
national debt is “the first year that I’m president and I
oversee a fiscal-year budget, make sure that revenues equals
spending. If we stop adding to the national debt, we can bring
it down.”

The Background: Cain, who has no experience in elective
office, is seeking to demonstrate a command on the economy and
fiscal issues to compete with Romney.

The Facts: A proposal by the heads of Obama’s debt
commission to cut the budget by $4 trillion wouldn’t wipe out
the deficit for more than 25 years. According to a research
group, the Bipartisan Policy Center, there will be an $830
billion deficit in fiscal year 2013 assuming current policy such
as the extension of tax rates. To balance the budget in fiscal
year 2013 through spending cuts alone would require a reduction
equal to 25 percent of all spending, the policy center said,
citing Conngressional Budget Office projections. That would be
more cuts than it would take to eliminate one year of spending
on Medicare and Medicaid.

Cain on Taxes

The Claim: Cain said Bloomberg News’ analysis of his 9-9-9
tax plan is incorrect. “The reason it’s incorrect is because
they start with assumptions we don’t make,” he said.

The Background: Cain’s proposal would eliminate the current
U.S. tax code. Instead, he would tax sales transactions and
gross income for individuals and businesses at 9 percent while
eliminating levies on capital gains. He also would end the
payroll tax that funds Social Security, and corporations
wouldn’t pay a tax on dividends. “It expands the base,” he
said. “When you expand the base, we can arrive at the lowest
possible rate, which is 9-9-9. The difference between the 9-9-9
plan and the other plans that are being proposed is that they
pivot off the existing tax code.”

The Facts: Cain said his campaign has received an
independent revenue analysis of his plan, though it hasn’t been
publicly released. He also hasn’t detailed the specific
assumptions his campaign is using. Working with the only data
publicly available, Bloomberg News calculated that the 9-9-9
plan would have generated about $2 trillion if it were in place
in 2010, compared with the $2.2 trillion the government
collected that year. Cain’s plan would generate $922.1 billion
from the sales tax, $912 billion from the individual income tax
and $127.7 billion from the tax on corporations. Cain said his
plan would win passage in Congress. Congress has been reluctant
to eliminate some of the most popular tax benefits currently in
the code, such as the mortgage interest deduction, which
survived the 1986 tax code overhaul.

Paul on Fed

The Claim: U.S. Representative Ron Paul of Texas said
Federal Reserve Chairman Ben S. Bernanke has compounded the
problem of inflation in the U.S., and that “he’s inflating
twice as fast as Greenspan was,” referring to Bernanke’s
predecessor Alan Greenspan.

The Background: The Fed is charged by Congress with
maintaining stable prices and maximum employment. The central
bank has taken unprecedented steps to ease monetary policy,
including lowering the benchmark interest rate to near zero and
buying $2.3 trillion in housing and Treasury debt.

The Facts: The Labor Department’s consumer price index, one
of the most common inflation measures, has climbed 2.2 percent
on average per year during Bernanke’s 5 1/2 years in office,
less than the average 3 percent rate during Greenspan’s 18 1/2
years. The M2 money supply, which includes currency, bank
deposits and money market mutual funds, rose 4.9 percent a year
under Greenspan and has increased an average 6.4 percent
annually under Bernanke. By other, less conventional measures of
inflation, such as the price of gold in dollars or the amount of
monetary base created by the Fed, there would be considerably
higher rates of inflation under Bernanke’s chairmanship.

Gingrich on Fed

The Claim: Newt Gingrich, former speaker of the House, said
Bernanke has “in secret spent hundreds of billions of dollars”
on bailouts of financial institutions and that nobody in the
news media has demanded transparency from the central bank.

The Background: The Fed stretched its emergency powers
during the financial panic of 2008 to rescue Bear Stearns Cos.
and American International Group Inc. It also created lending
tools to provide funds to banks, mutual funds and large
corporations.

The Facts: The Fed made loans to financial institutions --
it didn’t spend any money, and has said it has incurred no
losses. While the central bank kept much of the information on
the identity of borrowers confidential at the time, the Dodd-
Frank Act and lawsuits by Bloomberg News and Fox News resulted
in disclosure of the recipients in late 2010 and early 2011. The
Fed has separately spent $2.3 trillion purchasing housing and
government debt as part of monetary policy.

Huntsman on Taxes

The Claim: Former Utah Governor Jon Huntsman said “I
created a flat tax in the state of Utah. It took that state to
the number-one position in terms of job creation.”

The Background: With the U.S. unemployment rate at 9.1
percent and jobs still 5 percent below where they were when the
recession started in December 2007, job creation is arguably the
most important domestic policy issue today. The three candidates
with experience as governors, Romney, Perry and Huntsman, have
been touting their credentials as job-generating state
executives.

The Facts: The truth of Huntsman’s claim depends on which
data you use. Using the figures from employer payrolls, jobs in
Utah grew 4.8 percent during Huntsman’s tenure, from January
2005 to August 2009, which placed it fourth behind Wyoming,
North Dakota and Texas. If you use the Labor Department’s survey
of households, employment grew 5.9 percent during the same
period, placing Utah first. That ranking is eroded when you
account for population growth, dropping Utah to 35th over the
period.

Bachmann on Health

The Claim: U.S. Representative Michele Bachmann of
Minnesota said Obama’s health-care law will be run by a board of
15 political appointees who will “make all the major health-
care decisions for over 300 million Americans.”

The Background: Bachmann was referring to the independent
payment advisory board, a panel of 15 health-care authorities
established by the 2010 law to help curb Medicare spending.
Beginning in 2015 the panel will begin proposing cuts to
Medicare if yearly spending exceeds targets set by the law.
Congress could overrule the panel only with a three-fifths
majority in the Senate or if it comes up with an alternate plan
that saves an equivalent amount.

The Facts: The board only has authority over Medicare, in
which about 48 million elderly and disabled Americans are now
enrolled, not the 300 million Bachmann mentioned. The law
doesn’t grant the panel power to make health-care decisions and
prohibits the group from cutting benefits, changing eligibility
rules or increasing beneficiaries’ premiums or cost-sharing.
Instead, the board’s main tool for cutting spending will be
reducing payments to providers.

Bachmann on Medicare

The Claim: Bachmann said “nine years from now the Medicare
hospital Part B trust fund is going to be dead flat broke.”

The Background: Medicare Part A pays for inpatient hospital
services. Medicare Part B pays for outpatient services such as
doctor visits.

The Facts: The hospital trust fund is Part A, not Part B.
Part A is estimated to be exhausted in 2024, not in nine years,
according to the Medicare trustees’ annual report released this
year. Under one set of estimates by the trustees, the Part A
trust fund’s expenditures begin to exceed income in nine years,
but will not be “broke.” In the report, the trustees said the
Part B trust fund is “adequately financed over the next 10
years and beyond.”

Perry on Regulation

The Claim: Perry said he will offer a plan “for getting
America independent on the domestic energy side.”

The Background: Presidents since Richard Nixon in 1973 have
set a goal of U.S. energy independence. Oil imports have risen
since then and accounted for 49 percent of U.S. consumption last
year.

The Facts: The U.S. had proven reserves of 19.12 billion
barrels of oil, compared with 1.33 trillion barrels in global
reserves as of 2008, according to the U.S. Energy Information
Administration. The agency forecast in April that the U.S. will
rely on imported liquid fuels for 42 percent of consumption in
2035. The U.S. Ranks 13th globally, with 1.4 percent of proven
oil reserves, according to the Central Intelligence Agency’s
World Factbook.